Homeowners suffer as loan modification wait time lags

By Kimberly Miller, The Palm Beach Post, Fla.

McClatchy-Tribune Information Services

July 31--Hundreds of thousands of homeowners nationwide are waiting too long for loan modifications to be processed, leaving them in a financial limbo that can last up to a year, according to a federal report released Wednesday.

The growing wait time, called an "alarming trend" by the inspector general for the Troubled Asset Relief Program, began to build during the past six months with a backlog that now stands at about 221,500 homeowners.

That's nearly double the number who were waiting in November for responses to their Home Affordable Modification Program (HAMP) applications, the report notes.

"It is homeowners who suffer the consequences of their mortgage servicers' failure to timely process HAMP applications," the report says. "Without a timely review of their eligibility, struggling homeowners left in limbo may not pursue other foreclosure alternatives and, with options narrowing over time, may be at risk for foreclosure."

West Palm Beach-based Ocwen Loan Servicing is singled out in the report as having the largest pool of unprocessed applications at 60,812.

In December, Ocwen agreed to pay $2.1 billion to settle allegations that it cheated borrowers by failing to promptly credit loan payments, forcing them into expensive insurance policies, and denying loan modifications to homeowners who should have received them.

Ocwen disputes the numbers in Wednesday's report, saying its internal data differs from what the inspector general found.

"We have reached out to the Treasury officials administering the HAMP program to ensure data reporting is truly apples to apples going forward," the company said in a statement.

For as big as Ocwen's alleged backlog is, the report shows it processing modifications in just under four months.

CitiMortgage is shown as having the longest wait time to process an application at a year. The timeline for JP Morgan Chase is more than seven months.

Both companies defended their loan modification operations. CitiMortgage said once an application is complete, it tries to give homeowners an answer within a month. Chase pointed to recently imposed federal regulations that it says were not considered when delay times were measured.

"We are confident that when analyzing our HAMP pipeline with an understanding of these requirements, our performance would reinforce Chase's efforts to keep families in their homes," a statement read.

The processing time is especially an issue in Florida where foreclosure judges are sending homes to auction while borrowers await modification answers from banks.

Kevin Maher, the community outreach director for West Palm Beach-based DebtHelper.com, said he hasn't noticed a delay in loan modification processing. But, he said, his counselors also have direct contact with mortgage servicers through a special computer program that cuts down on miscommunication and missing paperwork.

"They can't pretend they lost something because if I can see it on my computer, they can see it on their end," Maher said. "We've had turnarounds in two weeks or less, but that's not generally the rule."

HAMP is one of several foreclosure prevention programs that fall under the $38.5 billion federal Making Home Affordable program. According to Wednesday's report, just $12.8 billion of that allocation has been spent to help struggling borrowers.

"At this point, with so much money unspent that is earmarked for HAMP, Treasury should be pulling out all the stops to ensure that eligible homeowners get into HAMP," the inspector general's report says. "Treasury needs to stop these delays with every tool in their arsenal."

Palm Beach County and Treasure Coast homeowners can get help modifying their mortgages at an event Aug. 6 in Port St. Lucie sponsored by Ocwen and the non-profit Hope Now organization.

The free event will take place between 2 and 8 p.m. at the Port St. Lucie Community Center, 2195 Airoso Blvd. For more information, go to www.HopeNow.com.